Ford will cut output, jobs in Russia as ruble and car demand weaken

BERLIN (Bloomberg) -- Ford Motor Co.'s Russian joint venture is cutting production and about 950 jobs at two factories in response to the falling ruble and deteriorating demand in the country.

A car plant run in partnership with Sollers near St. Petersburg will eliminate about 700 positions as it drops a production shift in June. Another 250 temporary personnel will be let go at a Ford-Sollers site in the country's Tatarstan region when it reduces to a one-shift operation. A Ford spokeswoman told Automotive News Europe that the company has not decided yet when the reduction at the plant in Yelabuga will take effect.

The St. Petersburg plant, which builds the Focus compact and the mid-sized Mondeo sedan, also will halt manufacturing for more than four weeks until single-shift operation begins at the paint shop and final assembly hall on June 9, Ford said.

Ford declined to comment on how much production will be reduced by the moves.

Ford's sales in Russia this year through February fell 21 percent to 10,556 vehicles, according to the automaker.

The company plans to add production of the EcoSport SUV at a third Russian factory run by the Sollers venture later this year.

The Russian auto market was declining even before the country's annexation of the Crimean peninsula and massing of troops on Ukraine's borders drew international economic sanctions.

Car deliveries fell 4 percent in January and February, following a 6 percent drop in 2013 to 2.78 million vehicles.

"Ford Sollers remains absolutely committed to the Russian market and is confident it has the right product plan, people and assets to deliver long-term profitable growth," the carmaker said in a statement.

Work force and production cuts were caused by "the rapid and significant depreciation of the ruble, falling industry sales and a consumer shift away" from compact models in favor of SUVs, Ford said.

The ruble has lost 13 percent of its value against the dollar in the last 12 months, and it was the second-worst-performing major emerging-market currency in the quarter ended Monday.

The drop prompted Renault, which controls Russia's market-leading Lada brand, to raise prices by about 3 percent in both January and March, Oxana Nazarova, a spokeswoman at the company, said last month.

Accenture said last week that Russia's dispute with Ukraine is causing "uncertainty in the marketplace.

Not all companies are spooked. Daimler is examining whether to build Mercedes-Benz cars in Russia as part of a plan to widen the automaker's global production capacity and assemble more vehicles near the markets where they're purchased.